Govt’s Affordable Housing Push Prompts ICICI Bank Shelve Plans Of Selling Home Finance Arm
It was in July 2015 when ICICI Bank had put its housing finance arm, ICICI Home Finance (IHF), up for sale for an estimated Rs 4,400 crore. For over two years, ICICI Bank negotiated with several bidders to sell the company. There has, however, been a change of plans recently. Not only has the lender shelved its plan to sell the business, but it is now looking at expanding its loan book capitalising on Prime Minister Narendra Modi’s push for affordable housing.
Buyers who have an annual income of Rs 18 lakh are given an interest subsidy of four per cent under the government credit-linked subsidy scheme. The subsidy move is aimed at helping the government meet its housing-for-all-by-2022 target.
“There is a large opportunity in affordable housing segment from non-salaried, self-employed, assessed income group due to the government’s housing-for-all project. This market is growing 1.5 times the normal mortgage market which is growing 18 per cent per annum,” IHC Chairman Anup Bagchi was quoted by The Economic Times as saying.
“Our ambition is to increase the book size three times to Rs 30,000 crore from Rs 10,000 crore now,” Bagchi added.
As the housing finance company moves forward to make it bigger, non-salaried people in Tier-II and Tier-IV cities ─ primarily rural areas ─ will be its prime target group. The hiring process is on to expand the business – IHC will soon have 150 new branches. Currently, there are 80 IHF braches in the country. IHF offers customers everything—“from doorstep service to minimum paperwork”. A borrower can apply for home loan in the range of Rs 3 lakh to Rs 3 crore.
It is worth mentioning here that ICICI Bank’s home loans business is different from that of IHF. The former primarily caters to the salaried class in Tier-I and Tier-II cities above the affordable housing threshold. The two sister concerns will have different target groups. “The bank (ICICI) will not actively solicit loans in this (affordable housing) category,” Bagchi said.